Investor Presentation

April 2014

Disclaimer

The information in this presentation is for information purposes only, and this presentation does not constitute an offer to purchase or
sell any security or investment product, nor does it constitute professional advice. The information in this presentation is based on
publicly available information about Sothebys. Except where otherwise indicated, the information in this presentation speaks only as
of the date set forth on the cover page. Permission to quote third party reports in this presentation has been neither sought nor
obtained.
This presentation may include forward-looking statements that reflect the current views of Third Point LLC (Third Point), Mr. Harry
J. Wilson, and Mr. Olivier Reza and their respective affiliates and associates (collectively, the Group) with respect to future events.
Statements that include the words expect, intend, plan, believe, project, anticipate, will, may, would, and similar words
are often used to identify forward-looking statements. All forward-looking statements address matters that involve risks and
uncertainties, many of which are beyond the control of the parties making such statements. Accordingly, there are or will be important
factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not
place undue reliance on any such statements. Any forward-looking statements made in this presentation are qualified in their entirety
by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Group will
be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Sothebys or its
business, operations, or financial condition. Except to the extent required by applicable law, the Group undertakes no obligation to
update publicly or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
On March 28, 2014, Third Point LLC and certain of its affiliates filed with the Securities and Exchange Commission (the SEC) and
began distributing to Sothebys stockholders a definitive proxy statement (the Proxy Statement) in connection with Sothebys 2014
annual meeting of stockholders. Third Point strongly advises all stockholders of Sothebys to read the Groups Proxy Statement
because it contains important information, including information relating to the Groups participants in such proxy solicitation. The
Groups Proxy Statement, as filed, and any further amendments, supplements, or other relevant proxy solicitation documents will be
available at no charge on the SECs website at http://www.sec.gov.

Source: Third Point LLC

Table of Contents

Third Point Overview

Situation Overview

Benefits of Shareholder Involvement

Current Boards Misdirection Campaign

Third Points Business Case

Sothebys

Overview of Sothebys Shortcomings

9-15
16

Corporate Governance

17-19

Expense Discipline

20-22

Growth Opportunities

23-24

Sothebys Potential

25

Conclusion

26-27

Appendix: The Shareholder Slate

28-30

Source: Third Point LLC

Third Point Overview

Third Point LLC is an investment adviser based in New York

Firm Overview

Third Point LLC (Third Point) is an SEC-registered investment adviser based in New York

Approximately $14.5 billion under management

Founder and CEO, Daniel S. Loeb, has over 28 years of experience in the financial markets

Third Point Highlights

Event Driven Investment Strategy

Proven Track Record

Focused on special situation investing across capital structures

Produced average net annualized returns since inception in 1995 of 21.2% while the CS/Tremont Event Driven Index, HFRI Event Driven
Index, and S&P 500 have returned 10.0%, 10.4%, and 8.9%, respectively, over the same period

Successful Activist Investor

Bloomberg recently highlighted how three Third Point activist investments (Yahoo!, CF Industries, Murphy Oil) delivered returns for public
shareholders that beat the S&P 500 in an article entitled, Activist Investors are Good for the Stock Price

At Yahoo!, Third Point helped create approximately $15 billion of value for shareholders, as the share price increased over 85% while Third
Point directors served on the board from May 2012 until July 2013

Note: all returns calculated for Third Point Partners L.P. and S&P from inception (June 1995) through 3/31/14; all references to the CS/Tremont Event Driven Index and
HFRI Event Driven Index reflect performance calculated through 2/28/14
Source: Third Point LLC; Bloomberg article Activist Investors are Good for the Stock Price from April 3, 2014

Situation Overview

How did we get here?

Third Point owns ~9.6% of Sothebys (the Company or BID) and believes the Company can generate significantly more
value for shareholders through, among other things, an infusion of new leadership, better accountability, and increased
transparency

Accordingly, Third Point and the Company held a number of in-person and telephonic meetings between August 2013 and
February 2014 to discuss Third Points ideas about how to increase long-term value for shareholders

During these meetings, the Company offered a Board seat to Mr. Loeb; however, based on Third Points experience, a
single nominee from an outside shareholder in a boardroom of 12 directors is not sufficient to bring about needed change

What is Third Point suggesting specifically?

Three directors to reinvigorate the Board and help Sothebys achieve its substantial potential

In this case, we believe that three is the right number given the total size of the Sothebys Board (12 directors), the number
of committees on the Board, and the specific challenges faced by the Company

Furthermore, three directors has proven to be effective for Third Point in the past, e.g., three Third Point nominees were
elected to the Yahoo! Board

Why should Third Points nominees (the Shareholder Slate) be elected?

The BID nominees we oppose (Robert A. Taubman, Daniel Meyer, and Jessica M. Bibliowicz), collectively, have limited
share ownership and qualifications that do not appear to add value for Sothebys shareholders

The Shareholder Slate (Daniel S. Loeb, Harry J. Wilson, and Olivier Reza), collectively, owns nearly 10% of the Company
and was carefully selected for its expertise in unlocking long-term value for public shareholders, enhancing operational
efficiencies, and formulating strategy at luxury companies
In fact, Third Point nominees have already delivered benefits to Sothebys shareholders

Source: Third Point LLC

Benefits of Shareholder Involvement

Benefits of greater shareholder involvement are already clear, but without continued
collaboration, progress will stall
Third Point Action

Response

May 2013: Third Point files 13F showing new

position in BID

August 2013: Third Point has first meeting with

Sothebys to discuss opportunities for improvement

October 2013: Third Point sends public letter to

Sothebys expressing concerns about leadership,
shareholder misalignment, strategic direction, Board
governance, and expense growth

February 2014: Third Point nominates three new

directors and highlights the lack of owners
perspective in the Boardroom as well as the long
tenure of current Board
Source: Third Point LLC; Stifel Analyst Research

Sell-side writes that the new presence of a well-known

shareholder-value advocate investor will bring attention to
real estate, excess capital, and expense growth

Company announces a review of its capital allocation and

financial policies

Company appoints a new CFO

Sothebys expands capital allocation review to include

examination of strategy, business, and cost structure

Sothebys appoints new Lead Independent Director

Sothebys publicly announces frameworks for business

reinvestment and excess capital return, as well as a special
dividend and cost savings program

Sothebys shares its conclusion that Mr. Loeb would be an

appropriate Board member and offers him a Board seat

Sothebys nominates two new directors to replace Sovern

(tenure: 14+ years) and Dodge (tenure: 8+ years)

Current Boards Misdirection Campaign

In a recent presentation, the current Board actively misled investors about Mr. Loebs
credentials and Third Points track record of creating value for shareholders
False
statements

Disingenuous
criticism

Gross misstatements regarding Mr. Loebs expertise and experience by claiming Mr. Loeb has no experience
in the art/ auction, luxury, and digital media/communications spaces

These statements are plainly false:

In the art/auction and luxury spaces, Mr. Loeb is a leading collector of modern and contemporary art, has been
recognized by ARTNews as one of the 200 Top Collectors each year since 2005, has had portions of his personal
collection exhibited at the MoMA in New York and in other global museum retrospectives and shows, and is a trustee of
the MOCA in Los Angeles

In the media/communications area, Mr. Loeb served on the board of Yahoo!, a leading digital medial/ communications
firm, from May 2012 to July 2013

Disingenuous criticism of Mr. Loebs Yahoo! involvement without reference to the benefits he brought to all
Yahoo! shareholders

Misleading
quotations

Greater than 85% increase in Yahoo!s stock price while Mr. Loeb was a member of the Yahoo! Board and another
~20% increase in Yahoo!s stock price since Third Point sold a portion of its shares (at the market price) back to Yahoo!
at the companys request

Specious conclusion that Mr. Wilson and Mr. Reza would add no incremental relevant experience to the
Board despite obvious evidence to the contrary and without even bothering to interview them

Highly misleading use of quotations from third party sources by selectively quoting excerpts from articles by
Gabelli & Co. and The New York Times that misrepresented the full message of the articles

Quotations only presented a one-sided story and left out praise of the accomplishments and value that Third
Point and Mr. Loeb brought to Yahoo!

The Gabelli & Co. report actually states: Third Point was the largest pre-transaction shareholder at ~60 million shares
and the architect of the 2012 Board reorganization (which we continue to applaud), and, later, With its 2012
reorganization, Third Point brought a shareholder advocate and adult supervision to the table.

The New York Times article actually states, regarding Third Points directors: These were good directors, and they
were part of needed change at Yahoo!.

Source: Third Point LLC; Sothebys Investor Briefing slides from April 8, 2014; Gabelli & Co.; The New York Times

Third Points Business Case

Our business case is a simple one

Managements claim that 2013 was a record year is misleading and demonstrates the
risk of having a Board asleep at the switch

While, relative to the Companys prior peak in 2007, the Company sold a greater dollar
value of art, the more meaningful metric is that the Company generated less revenue
and spent more money to do so

The bottom line is that earnings per share were down 42% versus their prior peak

Given the global tailwinds in the marketplace, this performance is unacceptable and we
believe it can be linked back to failed leadership of the Sothebys Board

We strongly believe the Shareholder Slate can reinvigorate the Board and
help Sothebys achieve its substantial potential

Source: Third Point LLC

Sothebys: Overview
Sothebys is one of the worlds two leading auction houses
CY2013 business mix
Millions of USD
100%

6,306
Private Sales,
1,179

80%

854

Business overview

Founded in 1744 in London and today operates globally with 90

locations in 40 countries

Conducted 230 auctions in 9 auction salesrooms around the world

last year; also operates private sales galleries in New York, Hong
Kong, and London

Over 70 collecting categories including fine art, furniture, and jewelry

Focused on the middle and upper echelons of the auction market

according to management

Relative to Christies only, Sothebys had approximately 46% market

share in auctions in 2013 vs. approximately 54% for Christies

Other, 78
Private Sales,
88

60%

Auction sales by category

40%

Auction
Sales, 5,127

Auction
Sales, 688

Old Masters
4%

Other Paintings
9%

Jewelry
10%

20%

Contemporary
27%

Other
11%
Asian
17%

0%
Value of Property Sold

Impressionist
22%

Revenue Mix

Note: auction sales represent the hammer price of property sold at auction and auction revenue represents total auction commissions; private sales represent the total purchase price of property
sold in private sales brokered by Sothebys and private sale revenue represents private sale commissions; other revenue includes auction guarantee and inventory activities, other agency
revenues (fees charged to clients for catalogue production, insurance, etc.), principal revenues, finance revenues, license revenues, and other revenues
Source: Third Point LLC; Company financials; Sothebys Investor Briefing slides from October 15, 2013 and April 8, 2014

Sothebys: Shareholder Return

Current Board claims BID shares have outperformed the market; however, a quick look at
historical performance suggests failure to create enduring value for shareholders

Source: Third Point LLC; Bloomberg (15-year daily price chart)

10

Sothebys stock
price has been
highly volatile
over the past 15
years

Price basically flat

vs. 1999 and
materially below
its 2007 high

Historical
performance
suggests current
leadership has
failed to create
enduring value for
shareholders over
the long-term

Sothebys: Structural Tailwinds

Global population of ultra high net worth individuals (ultra-HNWI) and their combined
aggregate wealth have increased to record levels (even before factoring in gains from 2013)

Ultra-HNWI +8% vs. 2007

Ultra-HNWI aggregate wealth +9% vs. 2007

Thousands of people

Trillions of USD

120

18
111.0
16.3
103.3

102.6

100

16

100.0

15.4
15.0

14.7

93.1
13.8

14
77.9

80

12

60

11.4

10
2007

2008

2009

2010

2011

2012

2007

# of Ultra-HNWIs

2008

2009

2010

2011

2012

Ultra-HNWI Aggregate Investable Wealth

Note: ultra-HNWI defined as those with USD $30 million or more in investable assets; investable wealth does not include the value of personal assets and property such as primary residences,
collectibles, consumables, and consumer durables; 2013 figures not yet available
Source: Third Point LLC; Cap Gemini World Wealth Reports 2008-2013

11

Sothebys: Luxury and Art Markets

As one might expect, luxury consumption across a variety of categories is on the rise, yet
the art market appears to be flat

Luxury consumption +28% vs. 2007

Yet the art market is flat vs. 2007

Billions of EUR

Billions of EUR

250

Category leaders
like Sothebys are
responsible for
expanding their
respective markets

Flattish art market

suggests Sothebys
has done a poor job
making art more
accessible and
appealing to HNWIs

Even though art, in

general, is perceived
to be a greater store
of value than most
luxury products
(e.g., handbags)

60

212

200

217

50

48.1

192

43.0

42.2
170

173

167

47.4

46.1
43.0

40

153

150
30

100

28.3

20
2007 2008 2009 2010 2011 2012 2013

2007 2008 2009 2010 2011 2012 2013

Global Luxury Market

Global Art Market

Note: luxury market figures include apparel, perfumes and cosmetics, accessories, hard luxury and art de la table; global art market figures based on actual auction
and dealer sales data, as well as projections based on the results from polling (per TEFAF)
Source: Third Point LLC; Altagamma / Bain; TEFAF (The European Fine Art Foundation) Art Market Reports for 2011 through 2013

12

Sothebys: Auction and Private Sales

Sothebys has generated a similar level of auction and private sales, though a closer look
suggests they might be losing share in art given growth in other categories like jewelry
Value of auction and private sales combined
only up slightly vs. 2007

But is Sothebys losing

share in art?

Auction and private sales in millions of USD (left axis);

art market in millions of EUR (right axis)

Millions of USD

8,000

Flattish sales in a
flattish market
suggests the Company
has failed to gain
market share

In fact, the Company

may actually be losing
share in art given
strong growth in nonart categories

80,000
6,306

6,122

6,000

8,000

5,801
5,380

5,279
4,782

70,000
60,000

6,000

6,306

730

1,179

270

50,000

4,000

6,122

513

40,000
4,000

2,751

30,000

2,000

5,122

-10%
4,614

20,000
10,000
0

0
2007 2008 2009 2010 2011 2012 2013
Aggregate Auction and Private Sales

Global Art Market

2,000
2007

E.g., jewelry now

comprises 10% of
auction sales vs.
5% in 2007

2013

Private Sales (category breakdown not disclosed)

Aggregate Auction Sales of Jewelry
Aggregate Auction Sales of All Other Categories

Note: global art market data from 2007 through 2013, per TEFAF, is based on actual auction and dealer sales data, as well as projections based on the results from polling
Source: Third Point LLC; Company filings; TEFAF (The European Fine Art Foundation) Art Market Reports for 2011 through 2013

13

Sothebys: Revenue and Expenses

More importantly, relative to 2007 (prior peak), revenue is down and expenses are up

Why has Sothebys generated less revenue from a

similar level of auction and private sales?

Why have expenses surpassed peak levels

despite a large cost savings program in 2009?

Millions of USD

Millions of USD

1,000
900

700

-6%

877

825

810

800

747

719

600

+2%
582

556

744

Mgmt targeted annual savings

of $100 million in 2009 vs. 2008

600

532

533

2011

2012

475

500

700

597

395

400
468

500

300

400
300

200

200
100

100
0

0
2007

2008

2009

2010

2011

2012

2013

2007

Sotheby's Revenue

2008

2009

2010

2013

Sotheby's Expenses

Note: revenue includes auction commissions, private sale commissions, other agency revenues, finance revenues, licensee fee revenues, other revenues AND excludes auction guarantee and
inventory activities, principal revenues; expenses include agency direct costs, marketing, salaries and related costs, general and administrative costs, depreciation and amortization AND
excludes cost of principal activities, restructuring charges, impairment charges, anti-trust related matters, gains on sale of land
Source: Third Point LLC; Company filings

14

Sothebys: EPS
As a result, earnings per share (EPS) has declined 42% relative to peak

Why is the Board extolling 2013 as a Record Year?

EPS in USD
$4.00

Down 42%!

$3.25

$3.00
$2.34

$2.46
$1.88

$2.00

$1.57

$1.00
$0.44

$0.00
($0.10)

($1.00)
2007

2008

2009

2010

2011

2012

2013

Sotheby's Reported EPS

Note: Reported EPS is a GAAP number
Source: Third Point LLC; Company filings

15

Overview of Sothebys Shortcomings

We believe Sothebys weak performance can be tied back to poor corporate governance,
irresponsible cost expenditures, and missed opportunities for growth

Poor Corporate
Governance

Lack of
Expense
Discipline

Failure to Seize
Growth
Opportunities

Current directors lack skin in the game due to limited share ownership, i.e., only 0.87% of outstanding
common stock, a significant portion of which was granted as part of the Boards compensation package

Current directors average nearly 9 years of service

Rapid adoption of a poison pill in response to a letter from Third Point in the hopes of preventing Third Point
from having a say in the boardroom

Auction commission margins seem low relative to attractive fee structure in part due to the unchecked use of
fractional commissions

CEO remuneration is high given the size of the Company ($3.0bn mkt cap) and perquisites are throwbacks to a
bygone era; also, limited transparency in communicating how executive awards are determined

Announced cost savings program barely scratched the surface and suggests the Company failed to make any
serious efforts to tackle the harder issues

Sothebys needs to articulate a strategy and vision

Both auction and private sales growth can be accelerated with better technology, more dynamic sales
techniques, and improved client relationship management, as well as more online and curated sales

Management can deploy more capital against the profitable secured lending business

Principal and dealer activities, though small today, can be expanded significantly through partnerships with
living artists, artists estates, and even real estate developers

Additional brand extension opportunities should also be explored

Source: Third Point LLC; Bloomberg

16

Corporate Governance
Current Board has little economic interest in the performance of the Company whereas the
Shareholder Slate has skin in the game
To be replaced by the Shareholder Slate
Director

Shares Owned
(000s)

% Ownership

Open market
activity since 1/1/12

Bill Ruprecht (CEO)

194.3

0.28%

Sold 86.4k

John Angelo

142.4

0.21%

Sold 137.5k

Duke of Devonshire

59.8

0.09%

Bought 5.0k

Robert A. Taubman

49.8

0.07%

Dennis M. Weibling

43.7

0.06%

Steven Dodge (retiring)

27.2

0.04%

Bought 14.6k

Michael I. Sovern (retiring)

26.7

0.04%

Allen Questrom

22.1

0.03%

Diana Taylor

18.4

0.03%

Daniel Meyer

6.7

0.01%

Marsha Simms

6.7

0.01%

Domenico De Sole

4.7

0.01%

Bought 4.0k

Total

602.7

0.87%

Sold 200.3k

Jessica M. Bibliowicz (nominee)

0.0

0.00%

Kevin C. Conroy (nominee)

0.0

0.00%

No owners perspective in
the boardroom; directors
hardly own any stock

Substantial majority of
owned shares were stock
awards

CEO has never purchased

shares in the open market
per Bloomberg

Since 1/1/12, directors as a

group have been net sellers

New board nominees have

NOT purchased a single share

The Shareholder Slate owns more

than 10x as many shares as the
current Board combined and both
Harry J. Wilson and Olivier Reza
have already purchased shares

Note: shares owned as of March 24, 2014 and include deferred stock units, dividend equivalent rights, as well as shares owned by wives, children, etc; ownership percentage calculated using
2013 weighted avg. diluted share count of 69.175M
Source: Third Point LLC; Company filings; Bloomberg

17

Corporate Governance
Current Board lacks fresh perspective necessary to overhaul the Companys challenged
operational structure and cure its cultural malaise
To be replaced by the Shareholder Slate
Director

Tenure

Duke of Devonshire

19.6

Bill Ruprecht (CEO)

14.2

Michael I. Sovern (retiring)

14.2

Robert A. Taubman

13.7

Allen Questrom

9.3

Steven Dodge (retiring)

8.1

Dennis M. Weibling

7.9

John Angelo

7.0

Diana Taylor

7.0

Daniel Meyer

2.9

Marsha Simms

2.9

Domenico De Sole

0.3

Average

8.9

Jessica M. Bibliowicz (nominee)

0.0

Kevin C. Conroy (nominee)

0.0

Institutional Shareholder Services

(ISS) recently released
QuickScore 2.0 guidelines for
optimal Board structure stating:

tenure of more than nine years

(can) potentially compromise a
directors independence

Using this metric, Sothebys current

Board fares quite poorly

Nine directors have served for

more than seven years; five of
which for more than nine

The Shareholder Slate would bring the

expertise and fresh perspectives
necessary to move Sothebys forward

Note: tenure estimated using start dates disclosed in the Companys 2014 Proxy
Source: Third Point LLC; Company filings; Institutional Shareholder Services

18

Corporate Governance
Current Board seems more interested in ensuring its members are protected, as evidenced
by its rapid adoption of a discriminatory poison pill in response to a letter from Third Point

Poison Pill

Current Board adopted a poison pill only two days after Third Point (~9.6% owner) published an open letter to
Sothebys calling for increased transparency and accountability and offering suggestions for improvement

Oddly, Sothebys poison pill permits passive investors (those more likely to be
supportive of the current Board) to acquire up to 20% of the outstanding shares,
while prohibiting non-supportive shareholders from acquiring 10% or more

Third Point is a minority shareholder looking for minority representation on the

Board

Corporate takeovers are not Third Points business model and Third Point has
no intention of taking control of Sothebys, which the Company knew

While claiming to embrace an open and honest dialogue with shareholders of the
Company, we believe this poison pill demonstrates that the current Board is more
interested in ensuring that its members are protected than it is in maximizing value
by considering shareholders suggestions for improvement

On March 25, Third Point filed a lawsuit asking the Delaware Chancery Court to require the Company to
redeem the pill or, in the alternative, either amend it to allow Third Point to acquire up to 20% of the Company
or enjoin the Company from enforcing the pill against Third Point

On March 31, the Court granted Third Points request for expedited discovery and set a preliminary injunction
hearing for April 25, in advance of the planned May 6 stockholders meeting

Lawsuit

Note: percentage ownership calculated using 2013 weighted avg. diluted share count
Source: Third Point LLC; Company filings

19

Expense Discipline
Auction commission margins seem low relative to attractive fee structure in part due to the
unchecked use of fractional commissions
Attractive auction fee structure, i.e.
house charges large % hammer price

Yet actual margins suggest BID is

leaving a lot of money on the table
Auction commissions as % of hammer price

Hammer Price of $4,200,000

(average hammer price of lots over $1 million in 2013)

Buyers Premium
(always paid; sometimes shared with consignor)

25% * $100,000

$25,000

20% * $1,900,000

$380,000

12% * $2,200,000

$264,000

Sub-total

= $669,000
(15.9% of hammer)

10% * $4,200,000

Total Auction commission

20.7%

20%

18.3%
16.5%

16.3%

15.9%

15%

10%

Vendors commission
(up to 10%; negotiable)

25%

$420,000

= $1,089,000
(25.9% of hammer)

Margins should be even higher for smaller lots given

how the buyers premium is calculated

5%

0%
2009

2010

2011

2012

2013

Sotheby's Auction Commission Margin

Note: hammer price is the final sale price before the buyers premium is paid
Source: Third Point LLC; Company filings

20

Auction margins suggest

limited fees collected from
consignors and increased
use of fractional
commissions, where
Sothebys shares the
buyers premium with the
consignor
The Shareholder Slate
recommends curtailing the
use of fractional
commissions and, at the
very least, completing a
detailed review of the
practice since it does not
appear to be generating
sufficient incremental
auction volumes

Expense Discipline
While CEO compensation seems high and perquisites are legendary, shareholders should
be more troubled by the lack of transparency and lack of pay for performance
CEO compensation in 2013 nearly as high as 2007
despite more than 40% decline in EPS

More color on compensation

CEO compensation in millions of USD (left axis);

EPS in USD (right axis)
10.0

Absolute level seems high for such a small company

(approximately $3bn market cap)

Beyond the level itself, the CEOs perquisites are

throwbacks to a bygone era

$3.50
$3.25

8.0

6.2

6.0

6.0

$2.50
4.0

More alarming is the lack of transparency in

communicating how these awards are determined

2.0

$1.88

0.0

$1.50
2007
CEO Compensation

2013

He receives a $25,000 annual personal automobile

allowance, his country club dues are paid for, and his
financial planning fees are covered by shareholders

The Company states in this years proxy that

disclosing certain performance goals would cause
serious competitive harm, making vague excuses as
a response to reasonable cries for accountability from
shareholders

Finally, seemingly no pay for performance culture

The Shareholder Slate believes shareholders should not
stand for the Company awarding such generous
compensation packages without transparency and
seemingly any connection to performance

Sotheby's EPS

Source: Third Point LLC; Company filings; Bloomberg

21

Expense Discipline
Announced cost savings program barely scratches the surface and suggests the Company
failed to make any serious efforts to tackle harder issues
Cost review only identified savings
representing nominal % total spend

Company expenses

Millions of USD
700
600

Salaries & Related Costs ($293 million): no

savings

General & Administrative ($177 million): $9

million savings from negotiated reduction in rates
and reduced scope of services on professional
fees and $4 million from other savings

Direct Costs of Auction Services ($85 million):

$5 million savings from increased efficiencies
and enhanced spending controls

500
400
300

597

Marketing ($22 million): $4 million savings from

more targeted approach to spending on core
strategic priorities and reduction or elimination of
less strategic components of marketing
expenses

D&A ($19 million): no savings

200
100
0
2013 Expenses

22
2014 Savings

More than half of

targeted savings come
from slashing the
marketing budget and
securing more
favorable terms from
external advisors

The Shareholder Slate

recommends seriously
analyzing both the
organizational structure
and expense base

Note: expenses include agency direct costs, marketing, salaries and related costs, general and administrative costs, depreciation and amortization AND excludes cost
of principal activities, restructuring charges, impairment charges, anti-trust related matters, gains on sale of land; cost items do not sum due to rounding
Source: Third Point LLC; Company filings; Sothebys Capital Allocation and Financial Policies Review slides from January 29, 2014

22

Growth Opportunities
Sothebys has clear opportunities to grow and become stronger over the long-term

The Shareholder Slate sees many areas of opportunity available to the Company

Strategy &
Vision

Define what Sothebys is today or what it wants to be

Articulate a long-term growth strategy and vision for the Company and its brand

Formulate a strategy to manage the inherent cyclicality of its markets

Auctions &
Private Sales

Competitors are laser-focused on the consumer experience and their brand, while Sothebys appears
indifferent

Contingency plan for the next downturn should have both defensive and offensive elements (e.g.,
prudent management of capital and expenses, opportunity to be a buyer or lender of last resort,
development of cycle proof earnings streams)

Invest in long-term talent development and recruitment

Cultivate numerous points of contact within the Company so that collectors and consignors become clients of
Sothebys, not just individual specialists

Invest in front-end technology to facilitate online sales and auctions

Invest in data technology to record private sale and auction inquiries to promote cross-selling, improve
customer service, and increase volume

Follow up with clients to drive cross-selling to capture a greater share of each clients relevant spending

Develop a robust approach to smaller ticket items in order to grow the customer base and compete more
effectively with Christies

Source: Third Point LLC

23

Growth Opportunities (contd)

Sothebys has clear opportunities to grow and become stronger over the long-term

Secured
Lending

Deploy more capital against profitable secured lending business, especially now that the business has a
separate debt facility to efficiently fund loans (consignor advances, general term loans)

Principal &
Dealer

Build a private business: initiate a greater number of curated auctions and exhibitions to leverage Sothebys
client base, real estate, and relationships

Opportunity exists to take share from art dealers and gallery owners (some of which are rumored to be
generating over $ 1 billion of sales annually) given Sothebys superior and continuous legacy, global
footprint, and in-house expertise

No defined long-term plan for the Companys S|2 galleries

Brand
Extension

Seemingly no shortage of capital with Sothebys having just returned $300 million of excess capital to
shareholders

How are artists chosen? How does Sothebys leverage its entire platform to promote them? And why is it
even called S|2 and not Sothebys?

Consider partnering with living artists and representing artists estates

Explore additional brand extension opportunities

E.g., wine storage, data analytics

Develop a more thoughtful retail strategy

What is the long-term plan for Sothebys Diamonds and Sothebys Wine?

How can the Company better utilize its locations when auctions arent happening?

Source: Third Point LLC; Sothebys Capital Allocation & Financial Policies Review slides from January 29, 2014

24

Sothebys Potential
Operating failures in 2013 cost shareholders significant value conservative improvements
in revenue growth and expense discipline could have more than doubled EPS!

Pro forma earnings power

All figures in millions of USD
2013

PF2013

Drivers:
Aggregate Auction Sales
Net Auction Sales
% Aggregate Auction Sales
Private Sales

5,127
4,339
84.6%
1,179

5,940
5,027
84.6%
1,179

Revenue:
Auction Commissions
Margin
Private Sale Commissions
Other Revenue
Total Revenue

688
15.9%
88
49
825

847
16.9%
88
49
985

Expenses:
Direct Costs, Marketing, G&A
Salaries & Related Costs
Total Expenses

(284)
(293)
(577)

(256)
(264)
(520)

EBITDA
D&A
EBIT
Interest & Other
Pretax Income
Effective Tax Rate
Net Income
# Shares
EPS

248
(19)
228
(37)
192
(30%)
134
69.2
$1.94

465
(21)
444
(32)
412
(30%)
288
69.2
$4.17

Modest Im provem ents Yield Significant Value

same as Christie's in 2013; historically BID w as larger
no change

just +100bps vs. 2013; historically as high as 20.7%

targeting 10% reduction vs. 8% target by mgmt ($22m on $284m)

targeting 10% reduction; likely inefficiences exist here too

4Q13 run-rate
4Q13 run-rate
effective tax rate from Sotheby's 2013 10-K

The Shareholder Slate

intends to focus on
improving operating
performance

Note: Revenues and expenses exclude inventory and principal activities as well as extraordinary items; Other Revenue includes Other Agency Revenues, Finance Revenues, License Fee
Revenues and Other Revenues
Source: Third Point LLC; Company filings; Sothebys Capital Allocation & Financial Policies Review slides from January 29, 2014; Christies website

25

Conclusion

Key takeaways

Third Point has a proven track record of creating long-term value for public
shareholders and has already delivered benefits to Sothebys shareholders

The Shareholder Slate brings much needed outsider perspectives to a tenured and
complacent Board that has presided over lackluster operating performance

With reinvigorated leadership and an owners perspective in the boardroom, Sothebys

can leverage its leading brand to generate significantly higher revenues and profits

The Shareholder Slate can be counted on to

create future value for all shareholders

Source: Third Point LLC

26

Conclusion

The Shareholder Slate

A Better BID!
Source: Third Point LLC

27

Appendix: The Shareholder Slate

Daniel S. Loeb

Daniel S. Loeb is the Chief Executive Officer of Third Point LLC, a New York-based investment management firm he founded in
1995. Third Point employs an event-driven approach to investing in securities across the globe. Immediately before founding
Third Point, Mr. Loeb was Vice President of high yield sales at Citigroup. From 1991 to 1993, he was Senior Vice President in the
distressed debt department at Jefferies & Co. Mr. Loeb began his career as an Associate in private equity at E.M. Warburg
Pincus & Co. in 1984

From May 2012 until July 2013, Mr. Loeb was a member of the Board of directors of Yahoo! Inc. He is a Trustee of the United
States Olympic Foundation, Mount Sinai Hospital, the Manhattan Institute, and Prep for Prep. He is the Chairman of the Board of
Success Academies Charter Schools. He is also a member of the Council on Foreign Relations and the American Enterprise
Institutes National Council. Mr. Loeb graduated with an A.B. in Economics from Columbia University in 1983

Mr. Loeb, a leading collector of modern and contemporary art, has been recognized by ARTNews as one of the 200 Top
Collectors each year since 2005. Works from his family collection are frequently included in global museum retrospectives and
shows. Mr. Loeb has assembled one of the most extensive collections of work by the artist Martin Kippenberger, many of which
were featured in the 2009 exhibition The Problem Perspective at the Museum of Modern Art in New York. Mr. Loeb is a Trustee
of the Museum of Contemporary Art, Los Angeles

Over the course of his nearly two decades as an institutional investor, Mr. Loeb has developed a sophisticated
understanding of how to create and unlock long-term value for shareholders. As Chief Executive Officer of the Company's
largest shareholder, Mr. Loeb would advocate vocally for stockholders' interests if elected to the Board. For these reasons,
we believe Mr. Loeb is exceptionally qualified to serve as a director of the Company.

Source: Third Point LLC

28

Appendix: The Shareholder Slate

Olivier Reza

Olivier Reza, through Myro Capital L.L.C., is, and has been since 2009, the Chairman of Reza Gem SAS, a private French
company that is associated with Alexandre Rezas jewelry business

The Reza jewelry collection is considered one of the most important collections of rare gems and jewelry in the world

Mr. Reza is the Founder and Managing Partner of Myro Capital, LLC, which provides management and financial advisory
services to family members and associated entities

Previously, Mr. Reza served as Managing Director in the Mergers and Acquisitions group at Lazard Freres & Co LLC in New
York, where he spent ten years working on transactions totally over $100 billion in industries ranging from industrial to consumer,
retail, distribution, metals and mining, oil and gas, pharmaceuticals, and manufacturing

Mr. Reza has a Masters degree in corporate and tax law from the University of Pan Theon Assas in Paris and a Masters degree
in finance from Institut dEtudes Politiques de Paris

Over the course of his career, Mr. Reza has gained valuable finance and transactional experience and has had the
opportunity to manage and lead an international jewelry company, developing expertise in cultivating relationships with
luxury customers. Mr. Reza personally has been, and continues to be, a very active art collector. For these reasons, we
believe Mr. Reza is exceptionally well-qualified to serve as a director of the Company

Source: Third Point LLC

29

Appendix: The Shareholder Slate

Harry J. Wilson

Harry Wilson, the Founder and CEO of MAEVA Group, LLC, is a nationally-recognized expert in corporate
restructurings, turnarounds, and transformations and in leading complicated businesses through corporate
transitions, as an investor/owner, advisor, or director.

In addition to MAEVAs active role in transforming companies, Mr. Wilson frequently drives transformational change in his
personal capacity as a member of the Board of Directors of companies undergoing major transitions. Currently, Mr. Wilson serves
on the board of Visteon Corporation and recently completed service on the boards of Yahoo! and YRC Worldwide. He also
served on the board of directors of several other companies earlier in his career. In each of his recent director roles, he was
asked to join the board by one or more major investors who wanted his help improving the respective company. Upon joining the
board, he worked closely and collaboratively with management and his fellow directors to dramatically change the operations of
these businesses and substantially improve their prospects for success. In all three recent public company situations, investors
benefited from enormous value creation through Mr. Wilson's work.

Before founding MAEVA, Mr. Wilson was a Senior Advisor to the US Treasury Department, serving as a senior member of the
Presidents Automotive Task Force with principal responsibility for the successful restructuring of General Motors. Mr. Wilson was
a partner at Silver Point Capital, a prominent credit-oriented investment fund, before serving on the Automotive Task Force.

Additionally, Mr. Wilson is active in philanthropic and policy initiatives. He recently completed a Presidential Appointment to the
Advisory Committee of the Pension Benefit Guaranty Corporation and serves on the board of two non-profit organizations: Youth,
INC and The Hellenic Initiative.

Mr. Wilson has an A.B. in government, with honors, from Harvard College and an MBA from Harvard Business School.

Throughout his career, Mr. Wilson has worked with companies as an investor, a Board member, and an advisor, to address
capital allocation strategies and to substantially enhance operational efficiencies. This experience includes significant time
and effort building consensus among management teams, directors, investors and employees to drive major improvements.
For these reasons, we believe Mr. Wilson is exceptionally well-qualified to serve as a director of the Company.
Source: Third Point LLC

30